6 July 2018 FT — Articles to Read

6 July 2018

Question: According to MSN:Money and Moving Guide, what are the 10 Best Ways to save money on a move?

BoE’s Carney warns of hit to global growth from all-out trade war – Pg. 2

–          An all-out trade war could drag down global growth by far more than the direct economic impact of higher tariffs….

–          …a 10% increase in duties by the US and its trading partners could, in a worst-case scenario, slow US output by as much as 5% over three years

–          The BoE calculates that the tariffs already announced by the US, EU, China, Canada, and Mexico would, if implemented, double average bilateral tariffs and raise average US tariffs to their highest level for more than 50 years, to about 4.5% for imports from China and 6.2% for imports from the EU

–          …BOE’s models suggest that a larger increase in tariffs of 10% between the US and all its trading partners could take 2.5% off US output and 1% off global output through trade channels alone

–          …the UK economy had grown up to 2% less than the BoE would otherwise have expected, given the strong global backdrop and fiscal policy…

–          Over the longer term, these losses would be aggravated because a loss of trade openness would be likely to drag on productivity growth…

Credit Suisse fined in US over jobs for princelings – Pg. 12

–          Credit Suisse has been fined $77m by US authorities for hiring the friends and family of Chinese government officials as part of a “corrupt scheme” to win banking business

–          …settle charges that between 2007 and 2013 its Hong Kong investment bank tried to win contracts with Chinese state-owned entities by hiring people with close links to government officials

–          The fines are the latest fallout from the scandal surrounding the hiring of so-called princelings in China by US and European banks

–          The justice department said Credit Suisse maintained spreadsheets for so-called “relationship hires”, which identified in at least three instances the specific deals that the recruitment allowed the bank to win

–          In one email quoted by the DoJ, a Credit Suisse employee explained that “relationship hires have to translate to $” or “the relationship is worthless to our organization”

Fed needs to wake up and admit the US is overheat – Pg. 20

–          The unemployment rate declined to 3.75%, a 48-year low and three-quarters of a percentage point below the Fed’s median estimate of its long-run sustainable rate.  Consumer prices rose 2.3% in May from a year earlier.  Excluding volatile food and energy categories, core personal consumption expenditures inflation moved up to 2%, matching the Fed’s target for the first time in more than six years

–          With the latest increase in the federal funds rate to a range of 1.75 to 2.00%, the Fed has finally brought real interest rates to about zero (Prof Note: “Real” indicates inflation adjusted)

–          Given the gradual pace outlined by the Fed, monetary policy would eventually become modestly restrictive some time in 2019 or later

–          …theory teaches that interest rates need to be restrictive before the economy overheats

–          International financial markets are responding to the prospect of tighter US monetary policy by bidding up the value of the dollar against other currencies.  In the past, this has been a key catalyst for international financial crises

–          With the Fed raising rates and the People’s Bank of China cutting reserve requirements in June, the renminbi slid more than 3% against the dollar, its largest ever monthly drop.  Continued depreciation risks a replay of the destabilizing capital outflows seen in 2015 when US and Chinese monetary policies also diverged.  Then, a mild financial panic that played out into early 2016 stoked fears of global recession

–          …Indonesia surprised market by hiking rates 50bps last month.  Mexico is raising rates to defend its currency and some observers think the next move in Brazil will have to be a hike too

–          …history teaches that the Fed has never successfully managed a soft landing with the current sets of macroeconomic conditions.  In every case when the Fed tightened policy by enough to raise the unemployment rate by more than four-tenths of a percentage point, it caused a recession

Answer: (1) Tax deductions; (2) Find free boxes (Prof Note: I keep all old boxes so no issue); (3) Use old newspaper for packing; (4) Don’t rent blankets (Prof Note: Rent…somehow I have assembled about half a dozen, at least, moving blankets); (5) Compare prices with portable storage units (Prof Note: While not feasible for many, I have four sea containers…legos for adults!); (6) Ship books and other items (Prof Note: Keep your copy of Foundations of Real Estate Financial Modelling close to you at all times!); (7) Use original packaging for electronics (Prof Note: I always keep the boxes for electronics for this reason and for when my IT manager upgrades my home system and we sell the old stuff); (8) Find cleaning supplies at a Dollar Store; (9) Plan out utility shut off dates; (10) Declutter (Prof Note: This is a great time clean out that clutter!)  (Prof Note: I just moved last month.  Also, remember that there comes an age when your friends should not be assisting, or at least assisting in a less labour intensive manor.  I hired movers but still need the Great Anton S to assist.  Halfway through I was done and Anton had hurt his back.  Even the great Anton S is mortal!)